The Money Files

A blog that looks at all aspects of project and program finances from budgets and accounting to getting a pay rise and managing contracts.

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5 Reasons why you need a resource management strategy

9 steps for asking for a budget increase

A Quick Guide to Managing Miniature Projects

How do you create an environment for managing successful complex projects?

5 Ways to create a budget

5 Reasons why you need a resource management strategy

Categories: resources


Read more about the reasons why you should be investing in a resource management strategy.

Posted on: February 27, 2015 10:59 AM | Permalink | Comments (0)

9 steps for asking for a budget increase

Categories: budget, contingency

You’ve looked at the budget tracker and – to your dismay – you can’t make the figures balance. At the current run rate you will be overspent by the end of the project. You are forecasting to be over by way more than your project sponsor has agreed in terms of tolerances. There’s only one option: you need to ask for more money.

Asking for a budget increase isn’t an easy thing to do. For one, it’s embarrassing, especially if you were involved in putting the budget together in the first place. You’ve got to admit that you got it wrong. Here are nine steps to handle that difficult conversation with your project sponsor.

1. Be honest

You can’t hide at this point. Make sure that you are working from a position of clear, transparent, justifiable data.

2. Get time with your sponsor

Don’t do this over email. Even over the phone is pretty bad. If you can, get time with your sponsor to meet them face-to-face. If necessary, book it through their PA and confirm the day before. You can do this as soon as you know you are going to need the meeting, and ask to see them as soon as possible. Your budget position is only going to get worse, so you need a steer from them about the project financials as soon as you can.

Give yourself time to work out the position and prepare some alternatives but ideally you’ll want to meet them quickly.

3. Sort out your estimating

You need better estimates. Most likely your project budget is over because you:

  • Forgot to include key elements of work
  • Didn’t estimate properly and several tasks are costing more than initially expected.

Estimate, and then include proper contingency reserves if you do not have confidence in those estimates.

4. Prepare a new budget

Use your new figures to revise your budget. Go back to basics. Start from scratch and do the whole thing again. There may be some elements you feel confident enough to keep but at this point nothing should be without challenge.


Because if you are going to back to ask for more cash, make sure you only do it once. Once is excusable – kind of. Twice makes it look like you don’t have a handle on the work involved and it undermines your professional credibility.

5. Prepare your rationale

You may be more interested in securing more funding, but your project sponsor is going to want to know why you need the money. Work out your arguments in advance, and make sure they are good.

You should be able to articulate why you are overspent (remember point 1 about: be honest and if you messed up, say so). Stay factual, and avoid apportioning blame even if it is really tempting to mention that you got a bad deal from a supplier.

6. Prepare some alternatives

Could you stick with your existing budget but deliver less functionality? Or deliver the same functionality over a longer period of time, perhaps with less expensive or in-house resources? Or deliver some functionality with the extra funding but not everything?

Come up with some alternatives to the whole amount so your sponsor has options. Be aware that one option is to cancel the project completely.

7. Prepare your sponsor

Don’t let your sponsor believe you are going to meet them to tell them that all is well. Nobody likes surprises, and in my experience, project sponsors hate them more than most! Send over a briefing pack for them to review in advance of your meeting, including the alternative options if securing the full amount of additional funding isn’t an option.

8. Hold your meeting

Meet your sponsor. Clearly present the current project situation and the financial position. Clearly explain what cash is needed to keep the project moving forward and why that is required. Give a level of confidence about how comfortable you are that these figures are now accurate and what is needed to complete the project on time and to the existing scope.

Talk to them about the additional options that you have come up with and ask if they see any further alternatives that would deliver business value but keep within reasonable cost.

Ultimately, your sponsor will make a decision about what to do next. The exact answer you get will depend on the situation and how far along you are in the project but it’s likely to be something like one of these:

“Here’s the extra funding. Carry on.”

“Here’s a portion of the extra funding. Let’s work out how much we can deliver with this.”

“There is no more funding. Work out what you can deliver without more money.”

“This project is no longer viable. Please shut it down and salvage what you can.”

9. Act on your sponsor’s decision

Your sponsor has spoken. Now it’s your turn to follow through. Obviously what you do depends on what route they have chosen as the most appropriate one for your project. Whatever the way forward, you should explain the situation to the project team so they are fully aware of what is going on.

Nine steps might sound like quite a lot but it’s an involved process that you need to get right. Have I missed anything out? What are your experiences of having to ask for more money to complete your project? Let us know in the comments.


Elizabeth also writes the blog, A Girl’s Guide to Project Management. Find her on Twitter here.

Posted on: February 22, 2015 03:20 PM | Permalink | Comments (6)

A Quick Guide to Managing Miniature Projects

Categories: small projects

Toy trains are now part of my daily life. In fact, I’ve had my routine disrupted several times by Percy from Thomas & Friends going missing, so much so that I’ve put plans in place to mitigate the risk of it happening again by shifting in other areas of the household routine.

That is why we went to visit a model railway exhibition, and that’s why I got started thinking about things in miniature – and those tiny projects you work on in parallel to the big things you have going on at the same time.

What makes a miniature project?

I’m not aware that there is any formal way of classifying tiny projects. For me, these criteria would define a miniature project:

  • Limited scope
  • Micro or no budget
  • Short timescales
  • High expectation of quality
  • Small group of stakeholders, probably some more committed to the project than others.

There are probably other characteristics as well, but those are the ones that immediately jump out at me.

What project processes can you miniaturise?

I have a couple of small projects on at the moment – one at work and one organizing a summer event for a group of friends. It’s not a big thing but it will take a bit of planning and a few phone calls to sort out. I want to apply project management techniques so I approach the work in a structured way, but I don’t want to go overboard.

I looked at what project tools I could use and scale right down:

Planning: No need for a Gantt chart. I can cut the planning right down to just a task list.

Meetings: Nope. Not when there is just me on the ‘team’ with a few other stakeholders who need to be kept informed. But in terms of planning and doing the work, I can do that alone. At least, that’s the view at the moment. If I need help I’ll ask for it.

Other communication: I can use email and texts. No need for formal status reporting.

Change management process: There will be changes. If you have ever tried to organise an event for a group you’ll know that there are normally several iterations of the right date, the activity, the cost, the guest list and so on. I can keep track of all that with my task list. If I consider anything a material change (such as the cost going up by enough that I feel everyone else should know), I’ll communicate and manage that accordingly.

What can’t you miniaturise?

There are some things that can’t be scaled down, even on small projects:

Quality: We still need a quality event. Just because the project is easy to manage and it’s small doesn’t mean the end deliverable should be boring or shoddy.

Risk management: OK, I’m not maintaining a huge risk log and holding a risk mitigation budget. But I am still taking contingency planning seriously, with the same effort as I would on a larger project. This ties into the point about quality: if I want my event to go off without a problem, I need to plan for the problems and head them off before they happen. In practice, that means having a wet weather plan and making sure that someone apart from me has the details for the day so that if I’m struck down by illness or delayed en route, they can pick up and start without me.

The difference is judgement

The main thing that I can identify from this is that it boils down to: “I’ll use my judgement”. And given my years of experience in project management, I like to think that my judgement is pretty good when it comes to getting things done.

Professional judgement helps you decide how to scale processes and what the end result should look like. It helps you decide who needs to know and how best to handle a decision. Mostly, I think, judgement comes with experience, but it’s a personal quality you can develop through observing others and continuous professional development as well. You don’t have to be a project manager of advancing years to have good judgement or to apply it intelligently.

I like small projects. They are easy to manage and rewarding, because you see results more quickly. Would you rather work on large initiatives or several small ones? Let us know in the comments and feel free to share your favourite techniques for scaling down your processes to deal with the miniature projects in your portfolio.

Posted on: February 21, 2015 06:23 AM | Permalink | Comments (0)

How do you create an environment for managing successful complex projects?

Categories: complex projects

PMI has produced a whole practice guide on managing complex projects. Navigating Project Complexity: A Practice Guide, takes you through how to assess your project in the complexity stakes and then put together a robust project management approach to handle the areas that might be difficult.

But it all starts with building a working environment that fosters the culture for complex projects to succeed.

The conditions for success

PMI identifies six conditions that, if present, will increase your chance of success on a complex project. Let’s take a look and see what they are and how you can recreate them in your own environment.

1. Leadership

It won’t come as much of a surprise to know that strong leadership is going to really help you develop and deliver a complex project. A good leader should:

  • Be an active executive sponsor
  • Demonstrate commitment to the project
  • Empower the project team to deliver
  • Notice the early warning signs of failure and work with the team to put in place recovery plans
  • Champion the project and highlight successes at senior management levels in the organisation.

Read more about the four traits of great leaders here (hint: it’s an attitude).

When working on a complex project, one of the key things a leader can do is to tell everyone that it’s an important initiative. Even if you can’t plan it to a fine degree of detail, at least set the leadership agenda so everyone is aware that it’s a huge strategic priority.

2. Portfolio management

Get portfolio management.

OK, that’s harder to do than it is to write. Portfolio management gives you the tools to navigate through complex project situations because:

  • It helps leaders understand project priorities
  • It helps share best practice between projects
  • It monitors the overall health of corporate initiatives
  • Managers understand the need to implement tools to support all strategic and tactical initiatives, which are looked at in a holistic way.

3. Collaboration

A culture that fosters collaboration is going to be able to successful negotiate the complexities of projects far more successfully than one which prefers knowledge silos.

Encourage communication between team members and also up to the project sponsor and program or portfolio team. Use change management practices to ensure that new ways of working are properly embedded. As a project manager, work with an open door policy both within your own team and also supporting cross-functional working across diverse teams as well.

4. Performance measurements

You can cope better with complex situations if the structure is in place to measure them. Performance metrics give you the chance to understand the health of the project at a given point in time. Then you can act to address that if necessary.

Set up your performance measurements (get some tips from Gartner’s experts for setting up project metrics here) before your projects go too far. Typical things that you would want to measure are:

  • Schedule performance
  • Financial performance
  • Adherence to scope
  • Quality

Complex projects would also benefit from using Earned Value Management too. Actually, the list of things to measure for complex projects is quite similar to what I’d expect more straightforward projects to be measuring.

5. Align organisational structures

Typically you’ll be managing projects within a projectised, matrix or functional organisation. The structure you use depends on the culture of the business, geography and lots of other things. However, for complex projects you may find a different-to-normal set up works better.

A flatter structure may work well with a distributed project team. There may be more delegated authority than normal. In my experience co-locating the team works well, as does arranging the resources under the line management control of a project manager so that managing the resources involved becomes easier.

In short, set up your complex project in any way you like that makes it easier to manage. The point is to take complexity out with your management structure, not make the situation worse!

6.Skills gap

Carry out an assessement of the skills available in the team toensure that you have the right resources available to you. Ideally, you should do this before the project really begins, otherwise you could find yourself committed to delivering project tasks and no one capable of doing them.

It’s fine to bring in external help if you feel that would bolster your internal team, but remember that long-term you should aim to be supporting this change initiative yourselves, so build in knowledge transfer from external resources.

By focusing on these six areas, you can create an environment for your project where even complex initiatives are more likely to succeed.

Enjoyed this? Follow Elizabeth on Facebook here.

Posted on: February 03, 2015 09:40 AM | Permalink | Comments (1)

5 Ways to create a budget

Categories: budget, estimating

Blank spreadsheet, new project. Where do you start? Here are 5 options for creating your new project budget.

Bottom up

This is my personal choice most of the time. Work out the cost of the individual items included in your project budget and then you add them up to get the big picture. Simple. Especially when you can rely on subject matter experts to give you the figures. All you have to do is ask intelligent questions and make sure nothing is overlooked.

There’s more on how the elements of your budget fit together starting with the individual task estimates created through bottom up estimating here.

Top down

Parametric estimating is not a method that I tend to rely on, but it does work. It relies on you having sensible data to use at an overall level (although there is no reason why you couldn’t decompose your tasks and work it out at lower levels).

For example, if it takes one person three days to dig a trench and you need three trenches, that’s nine days of digging.

The risk with this very simplistic example is that maybe people need a rest day after they’ve been digging for two days. Or maybe one of the diggers doesn’t dig as fast as the others. Still, if you’ve got a reliable way of using data to extrapolate your estimates, you may as well use it to give you an overall, high level estimate while you consider other techniques to refine your approach if necessary.

I’d be interested in hearing about examples from people who have successfully used top down or parametric methods to work out their budgets to understand more about the type of projects it is useful for. Get in touch if you have anything to contribute on that topic.

Based on previous projects

This is a method I’ve also used successfully, although it does rely on:

  • Your previous projects having good cost management processes
  • Your previous projects being updated when estimates change
  • Making sure that you are using the latest estimate data and not the original budget forecast from the project initiation stage.

If you can get round that and use real, validated data from previous similar projects, then I think this is a very robust approach to putting together a budget for your new project.

For example, we often repeat project implementation phases in multiple sites. The initial planning and set up at one site might take a bit longer than by the time we’ve done it 25 times in 25 locations, but essentially the steps are the same. We use the data from the first two or three installs to determine the implementation plan for the other sites. Then it’s almost a case of working through a project checklist and productionising the deployment of software on site. Of course, we always hit some kind of unique problem, but if we know there will be something at each site the overall timescales are still virtually the same. It does mean that sites that will get the software in the future are able to know with a high degree of certainty about when the project team is coming to them.

Using three point estimating

Three point estimating takes some time to do. OK, all estimating should take time to do if you are doing it properly. But three point estimating takes more than the others as you aren’t estimating once, you’re estimating three times.

First, you estimate the optimistic time for completing the task. Then you estimate the most likely result. And finally, you need a view of how long it would take if it all went a bit wrong – the pessimistic view. Then you use the formula:

Take your most likely estimate and times it by 4. Then add on the optimistic estimate and the pessimistic estimate. Divide the total by 6. That gives you a weighted estimate of how much the task will cost, weighted in favour of the most likely cost, but taking into account the fact things might go well or they might not.

A combination of approaches

I know I’ve said that bottom up is the approach I rely on the most, but really, it’s this one. I use whatever works at the time, and in reality that’s a combination of approaches based on the data I have, the expert input available at the time and my best guess.

I think that given the choice, most project managers would opt for this approach to building their budget. It’s the most flexible, and gives you the best chance of coming up with a sensible budget. Where you’ve got data for parametric estimating, you can use it. Where you know how to decompose the tasks, you can plan from the bottom up, and so on. Why limit yourself to one way when actually a combination of methods would get you a better result?

The only thing to remember is to make sure that your cost management plan includes the assumptions and parameters you are using to estimate so that if someone else needs to review your budget it’s clear to them how you came up with the costs you are using for each element.

If you had to choose your favourite budget method, what would it be? Let us know in the comments.

Posted on: January 06, 2015 06:41 AM | Permalink | Comments (2)

"In the real world, the right thing never happens in the right place and the right time. It is the job of journalists and historians to make it appear that it has."

- Mark Twain



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